The Customer Flywheel
As the person responsible for scaling my company’s revenues, my mind has always been on acquiring new customers. That felt logical: more clients equals more revenue, and eventually more revenue equals the growth of our company. But I have learned an important lesson over time. Rather than constantly rushing to compel new customers to purchase our product, it’s frequently more intelligent to concentrate on the customers we already have.
Something magical happens when we put our focus on the customers we already have. It makes them feel loved and understood. They feel more confident in us because we are not solely there to sell them something and make a quick exit. They know we want them to do well. When our customers feel this way, they become raving fans and long-term customers.
Many VP of Sales make the mistake of not focusing on customer lifetime vale (CLV). It is simpler to sell additional products and services to existing customers who know and like us. Don’t miss out on the revenue from increased usage/adoption and new feature releases; expansion with existing customers is more profitable because it costs less to acquire that business.
Concentrating on customer retention also improves our product. Conversing with our existing customers directly sheds a significant amount of light on their needs. They can tell us what segments of the product are useful and what portions are challenging. They can tell us what new features would be useful to them. We make our product better then—not just for them, but for everyone. A better product = happier customers = better results for the company.
It also smoothes out and calms business. It enables the company to spend more time helping its customers rather than constantly feeling the pressure to find new ones. This makes it easier, and often more pleasurable, for our team to do its job. We have good, helpful conversations with people that we know and who already trust us, rather than expensive ads, trade shows, or cold calls.
Of course, though, getting new customers is always a good thing and your existing customers are your warm network for referrals. Many companies do not have a formal process that is interwoven throughout the customer journey, and this is a missed opportunity. Referrals often have a shorter sales cycle and have a lower cost of acquisition which is another win for your revenue engine.
I like to call this the customer flywheel and ensure we can help customer realize value quickly, so they not only stay but expand and refer business with our organization. This is key to sustainable efficient growth – reducing the cost to acquire new business.
